tv [untitled] December 23, 2011 4:31pm-5:01pm EST
financial industry playing by their own rules listen to this. this is like the special olympics for financial fraud where everyone gets a gold little but nobody actually choose anything and they keep going the board. will talk to max kaiser host of kaiser report to find out what he thinks and speaking of derivatives these bets added fuel to the fire that end goal the financial markets in two thousand and eight most famously of course seen in the explosion and bailout of. more recently m.f. global customer money used to trade on these exchanges went missing so where to future exchanges come from and where have they gone wrong from ancient greece to m.f. global we will break it down and heading into two thousand and twelve will it be a happy new year for the u.s. economy maybe not economists predict sluggish two percent growth an economy held down by housing troubles government budget cuts and a lousy job market but that did not stop the hordes of people from lining up at
malls and waiting all night for a chance to buy the one hundred seventy five dollar air jordan sneakers we'll show you what happened let's get to today's capital account. it is friday and we are getting closer to the first vote in the lead up to the two thousand and twelve presidential elections january third really just a week and a half away is the big day for the iowa caucuses and also efficient cars derivatives exchange has its way this will also be the big day for their new venture to kick off betting on the outcome of this presidential race so suddenly
when you see gaffes like this one which is now infamous you could think about how to cash in on it the third agency of government i would i would do away with education the. commerce right back to the commerce and let's see i can't the third remark you know so. who's opes and seeing a billboard leg of this one you may you know pull over and think about how you're going to change your trading position because the north american derivatives exchange the nade x. it's based in chicago has filed for permission to list futures options on the political outcomes of the two thousand and twelve elections now this betting in prediction markets does exist for example on in trade this chart shows how mitt romney is trading but what's new is this would be the first regulated u.s. market the first regulated u.s.
market to offer legal betting on the outcome of the u.s. presidential election investors could also wager on which party will control the house and the senate we talk to max kaiser about this financial activist and host of the kaiser report on r t earlier because he actually founded the holywood stock exchange in one thousand nine hundred six which allowed people to trade on actors and movies so he knows prediction markets here he is actually talking about it way back when. there's an attempt to make a simulation based on wall street is very accurate we have our own for example hollywood reserve board chairman dr zeros who raises rates interest rates up and down. so that was his experience in the hollywood stock exchange he also used to work on wall street so i started by asking what he thinks when he hears that u.s. democracy could now be traded on an exchange. or as a couple of things first of all this combines the graft they see in washington with
the fraud and malfeasance you find on wall street and in chicago so it's combining the two worst elements of american politics and economics today into one wrapper and of course the potential for abuse and insider trading is huge and i think if you have to you have to go back to the dodd frank last summer where they outlawed parts of these prediction markets contracts part of the covering such things as terra features but they also banned of box office futures contracts at the same time and i think that's a very interesting story why were they banned box office futures contracts but allowed political futures contracts there's a story they're not sure and many people know that story do you know that story what is the answer. well my understanding is that the canner fitzgerald was put together a cancer exchange they spent years putting it together box office futures contracts
and they spent over twenty million dollars when the m.p. a found out just a couple of weeks before this was set to be approved about the emails of the death threats dollywood stars that were circulating in asia sex cantor fitzgerald they were freaked out because they realize that this sets up the potential for people to attack hollywood stars to make money on a box office future scenario so stars like brad pitt angelina jolie were mentioned in emails and these stars would be targeted by traitors sold short and then attacked but it's interesting that america's politicians don't get this kind of protection what arak of hollywood stars do so what does it tell you about america they all attentions are expendable but stars are not expendable that's an interesting point that you break that you bring up but i want to look at how politicians could possibly use this exchange we've seen candidates like herman cain be accused of running for president to essentially sell books i'm curious if
there's any example you can think of where you know g.o.p. candidates for president could actually use this exchange for their personal benefit or to help their campaigns. in two thousand and eight we know that john mccain was manipulating his price on the ensure a market to make it appear as though he was a front runner so you can abuse these markets as easily as you can abuse any market to affect the perception of what candidates are ahead and thus affect the media covers the candidates and by using money and fraud as you do it all markets these prediction markets on this on this exchange are no different they're totally influenced by money and corruption except now it affects politicians so the political environment of america and now the financial eyes securitized and traded in the. fraudulent matter by the same people that brought us m.f. global and all these other financial scandals and i'll be right inside the political process and of course inside information in washington is legal so now you have cameras treading on the old and for inside information about themselves so
they can potentially spread rumors about themselves make money on the rumors trading on inside information then use the profits to buy off whatever they need to buy off or to feather their re-election campaigns so this is really the death knell for america in a lot of ways because you're taking that last bastion of hope that there are such a thing as a political democratic process and you're throwing it to the wolves on wall street and saying let's securitize it let's find let's financial lies and let's turn it into the same corrupt cesspool that we now have on wall street and then the chicago mercantile exchange so there's i'm afraid that's going to be spectacular it's going to go out of blaze of glory but this is definitely got to be the end i would think again was speaking of money and corruption and you brought in congress you brought in wall street so naturally let's bring that that i want to go to dimitri i think it's a lot of jump in here and we know that from a two thousand and three federal reserve transcript that the f.o.c. was considering using the derivatives market specifically put options on u.s. treasuries to influence long term expectation expectations of the treasury yield
curve since the fed is expressed interest already in meddling in these markets what would stop them from going into the open market for. futures futures contracts for politicians that actually influence what the people the united states think is possible with respect to who they can or can elect. well nothing stops them i mean the scandal they are talking about is the government selling puts to income actually microsoft does a same thing other big companies do the same thing they sell puts on themselves for the income and they buy stock of themselves so they never have to pay out of that income is the same thing as a credit default swap you're writing credit default swaps you'll never have to pay because you can simply go bankrupt and say that the counter party doesn't exist anymore so yeah it's just opens up a can of derivatives but it applies it to that democratic institution and they're not taking into consideration the assassination risk potential here you're putting a bull's eye on these politicians said gabriel of who was shot in the head after sarah palin put
a bull's eye on her and she got shot imagine putting that now of traitors all over the world who have a vested interest in seeing these politicians get shot but hollywood of course it's ok to protect them under the bill those of past last summer are to cantor fitzgerald box office riches exchange but for politicians in america it's open season who cares we're going to make money who cares well done frank says that betting on assassination is not fair game but we'll have to see how this goes that's not the end of our conversation we'll have more with financial activist and host of kaiser report next kaiser but first this. all right it's time now for word the day where we break down a fan szell turn or concept for our very smart viewer but just maybe not the financial expert and today it is futures exchange given that we are talking so much
about them the nate x. which we're talking about is it futures exchange so what does it mean it is this it is a central financial exchange where people can trade futures contracts or other derivatives which are financial instruments whose values are derived from the price movement of the underlying assets of stocks commodities etc now it turns out they've been around for a very long time though one of the earliest known futures markets developed in pre-socratic greece as far back as six hundred b.c. or right about there by this guy the leaves of millet to see is a philosopher turned a riveted trader what he did was he came up with the bright idea of securing future use of all of presses prior to all of harvest for a fixed price he was betting that a big harvest would boost demand for them and this then allowed him to sell back the options to these all of prices contracts at a higher price to other greeks that were suckers who did now the bright idea he had
in more recent times we saw the rise of futures markets here in the united states specifically in chicago where proximity to farmland and agribusiness made it a logical choice because as we said commodities are dealt with in this way now although these markets already existed it wasn't easy to find a counterparty on demand meaning they were illiquid so effectively these were over the counter markets which we hear a lot about today but often these contracts were not honor which was a major problem in this we. one of the reasons for running these transactions through a regulated u.s. exchange right here a clearing house to clear the trades and provide also a central counterparty that will extend a guarantee that the trade will be settled as it was originally intended so what you have is a futures seller like a farmer that will sell futures contracts through this clearing house and then the buyer of corn or whatever will buy futures contracts through the clearing house to
which ensures that everything pans out as everybody signed up for now the chicago board of trade was created eight hundred forty eight to help buyers and sellers of these derivatives hedge their positions on a regulated exchange again it was later bought out by the chicago mercantile exchange or the c m e who we've heard a lot about lately the chairman terence duffy our audience should know very well from the m.f. global saga as well as our coverage at about two am monday morning october thirty first and then i will inform the c.f. you see and see in me at approx me the same time that the shortfall was real and that customer share group funds have been transferred out of segregation to the firms that broker dealer accounts. now i'm a global customers we're transacting on regulated futures exchanges so of course the recent experience of m.f. global's customers with segregated trading accounts where their money was lost has thrown the entire premise of the having such regulated markets into question since
one of the major point of paying the premium to run transactions through an exchange is to mitigate if not eliminate counter party risk and that is a futures exchange. now still ahead do not go away two thousand and twelve is on its way and you know what that means yet the end of the world has stereo will tell you how some companies are cashing in on it first their closing market numbers. you just put a picture of me when i was like nine years old on to tell the truth. i
have a confession i am a total ghetto princess i love grabbing hip hop music and tricks. but it was kind of a yesterday. i'm very proud of the world without you it's a place. you don't know sometimes you see a story and it seems so you think you understand it and then you glimpse something else hears you some other part of it and realized everything you thought you knew you don't know i'm tom part of the big picture. what drives the world the fear mongering used by politicians who makes decisions to
break through it's already been made who can you trust no one who is you view and with the global machinery see where are we heading state controlled capitalism is called sasha's when nobody dares to ask we do our t.v. question more. welcome back we're going to stick to this presidential prediction market now you know and futures markets are if you didn't already most of our audience i'm sure does and going back to this presidential one i wanted to play devil's advocate a little bit because we're sitting here in washington d.c. we are well aware here and i'm sure in most of the country you are too that americans are disillusioned with politics congress's approval rating has had an all
time low seems like that keeps happening but here is another one only eleven percent of the country approves of congress the lowest since gallup began this poll and americans are disillusioned with their options for president in two thousand and twelve fewer than half of people in a usa today gallup poll say there is any candidate running republican or democrat who would make a good president at all so given this i asked max kaiser hey you know aren't these futures options at least a way that citizens can get something out of american politics. that's the most cynical thing i've heard all of their lord while some ocracy doesn't exist there's no representation old democracy in washington so let's turn it into a giant roulette wheel and it will make the lottery and make a few bucks on the collapse of the american empire wow that sounds fantastic and happy new year oh what was this is what has come to an america that there's no hope for a democratic election the elections are already rigged are you putting the potential
of securitizing election rigging and putting into the hands of the john corps in the world we're going to securitize of leverage up to one hundred to one or a thousand to one or two thousand to one and the entire process will be based on whether or not there successfully undermine the entire process through fraud and malfeasance insider trading and market manipulation of course is going to be a disaster and while i don't know i might be cynical i think i might be as speaking to some people's desires here we saw the spanish lottery be there you know spanish people's maybe only chance to win it big with austerity in their country but back to the united states back to market manipulation i do want to get to that but i also want to bring in the market maker into this because the c.e.o. of the natick said that there is a market maker on board for the other side of client trades but he wouldn't name who i'm just curious if you think i don't know maybe the vampire squid tentacles are going to be spread all over this one. we would name the market maker because he's the market maker we're finding out whether it's j.p. morgan the silver market or any of these traders of the sovereign bond market they
are both a buyer and the seller there's no price discovery they pick a price they want their securities to go to and then they fill in the automatic trading to hit the price if they've already pre-determined that's going to be the same way these presidential futures markets or the prediction markets and as i said before john mccain's camp was already caught manipulating the interest contract in two thousand and eight they're just going to multiply that exponentially and of course all the money coming in through private donors now they've deregulated that so they have unlimited private cash affecting these more elections in the u.s. and people america will just watch the action on the political futures markets they don't give a care who is actually running for any office at any given time and if anyone gets shot in the head well so is going to a lot of money in there the winner for that day it's like running man on steroids on an electronic futures contract brought to you by the same c.f. to see run by the same goldman sachs scum who has been responsible for all the fraud up until now you know it's ridiculous how can they the shifty see the c.m.e.
can't even manage any of the markets that the currently involved in why the adding yet another esoteric market that puts american democracy in the crosshairs as sarah palin how many quality issues across there is she had to put on their head to do get shot in the ed before she satisfied what is going on over there is it a turkey shoot for a few like the koch brothers to make a few extra bucks on top of their billions i suppose is appalling i was thinking of a running man on steroids let's bring machines and technology into the mix and talk about market manipulation because we have your virtual specialist technology used to make markets and you said that this is fallen into enemy hands now you also have high frequency trading which siphoned off existing money from existing exchanges so i'm just wondering how these technologies could be used to exploit democracy and manipulate expectations about the president is after all this is supposed to be a predictive market. right well it's price propaganda price creates a perception and people act on that price and he said happening in these other
markets the price discovery as we know it is gone there's no supply and demand meeting on the floor of the exchange and there's a price resulting from a specialist function my virtual specialist technology to have a u.s. patent on was meant to solve these problems to create a better specialist system but it got taken over by cantor fitzgerald they and in turn used it as the basis for cancer exchange and they were going to launch box office features until the m.p.a. heard about these death threats to angelina jolie and brad pitt and they within a few days they got congress to outlaw that product how fast is congress ever act the algal anything they're going to act in two weeks because they're consider their staff their per their their stars as in central so that industry they've got protection but in washington and democracy and in politics in america who the president is who the vice president has that's just collateral news who cares we just want to know what their price is and if we can manipulate the price then
better for us there's no markets out there that are not being manipulated by these market makers with the infinite credit zero cost of funds and control of the technology seventy to eighty percent of all the volume on the new york stock exchange is automatic control algorithmic trading high frequency trading these are not people making buying and sell decisions based on some quantity of buy some analysis that they figured out in terms of a long term value it's all being rigged it's all game rigging automated game rigging now we're going to see the same thing to the political process and the results are america's basically committing suicide and it will be a spectacular show don't get me wrong this will be fantastic to watch but i'm afraid it won't do any good to the long term viable sustainability of the united states as we know it had of suicide do you think before that we may see a flash crash in democracy with all this high frequency trading. absolutely there you understand of course. when we go on you've got people who are looking
at the political candidates as neat as a pork belly and there are thinking well obama has an air force one could blow up in the psycho make a bunch bunch of money then there's a lot of these products for the terror futures because john poindexter at the pentagon rip off the idea that i was stock exchange of character futures markets but instead safe made all of the americans themselves terrorists because now every single american can bet on a political catastrophe for the convenience of their laptop so now i've got three hundred twenty million terrorists it's between canada and mexico it's united terrorist state of america trading on this nuclear exchange hoping for politicians to blow up in the sky what a frickin country. what a frickin kind journey there is nothing else we can say after that but actually max kaiser had a lot more to say and as he was talking about politicians being at peace and me
don't you want to know who in his mind is that axis of weasels not the axis of evil in this terrorist plot he's talking about there is the axis of weasels we talked about that he also made a bold prediction about what will happen with this prediction market specifically we talked about all of this we are going to put it up as a web exclusive on our website youtube dot com slash capital account on tuesday so you have something to look forward to if you're celebrating christmas after you do so you can get back into the groove next week on tuesday with our web exclusive. ok speaking of prediction markets we've talked
a lot about them what about predictions for the two thousand and twelve economy well according to the wall street journal economists are predicting sluggish two percent growth with the economy weighed down by housing woes by the euro zone crisis by joblessness all of not so good news but i want to bring in our producer dimitri coziness and shannon donahoe in the control room because this would not be possible to really break down properly without you guys involved in this story because despite all of this bad news which we're looking towards it doesn't stop the hordes of people from lining up for the coolest hottest shoe according to them i had no idea what this shoe is i didn't even know that jordan's still existed but apparently there are that shoe and people lined up for a one hundred seventy five dollar one here is one reason why. the little girl's room through this code only want to shoot everyone this lawyer to
. lawyer the man. that's it so with everybody so broken jobless where folks getting the money to line up for these two hundred dollar shoes well some of these guys remember i mean that i mean some of them are obviously that way to us on their hands so these guys are like street are pretty hard shores right because they're i don't even what is that are. they're doing they're making money off the spread they're going to go and buy absolutely they're like little hedge fund managers and you're online they buy the books in the can sell him for three hundred dollars spread they can sell him you know for foreigners seventy five dollars oh so you think this is a business deal i think for some of these guys it clearly is right there by themselves and you probably watch the news reports with all of the people lining up there were police there because people were trying to. into the stores trying to hide in the stores i don't think it's about a business opportunity here i'm sure that it was a business opportunity for some people but for the vast majority it i mean i think
that they got in those lines because certain stores and they had like one thousand pairs so once you're out you're out well for the one percent it was a street arbitrage opportunity but for the i don't percent think there were a lot of the one percent out at midnight in the suburban mall no i mean there's subsection there's the one percent the street arbitrage sure ok who is going to go there and make that spread ok we're almost out of time but we told you that two thousand and twelve isn't looking so hot but if you're one of those people that think it's actually going to be the end of the world on december twenty first of two thousand and twelve which is the end of the mayan calendar guess what you're not alone because people are cashing in evidently mexico is expecting to see tourism surge by thirty million people compared to a typical year they're expecting to see fifty two million visitors i heard mexico is actually sawing the credit default swaps against itself and it is a creation of this event they're going to. well in the cash ahead of the the mayan accountable have to wait to see how that trade pans out december twenty first of
next year this is the last we're going to see of you this year why monday capital account is taking a break today for the rest of the week we have great shows put together for you with the best of what you've seen here as well as viewer feedback every day but for now that's all we have time for happy holidays from everyone here at capital account thanks for watching and have a great night. welcome to the. new year's wishes on technology update next generation places made from super strong homes for lightweight building materials coated with a host of nuclear isotopes a clear plan it seems to be a revolutionary way to get rid of or growing landfills and along with the russian leaders.
tonight we're going to discuss the recent deadly bomb attacks in syria and iraq and ask our guests whether or not the u.s. and its allies are ready for a religious war. is this as you can see is still perfectly edible and there's no sense that it should be wasted thrown away. why are so many americans throwing away food well so many others are hungry for a good meal our correspondent marina before and i will show us the amount of food being wasted each day and how it's affecting the rest of the.